Miners lead London to fresh high

Daily Mail slumps after scrapping newspaper sale plan

By

SimonKennedy

LONDON (MarketWatch) -- The benchmark FTSE 100 index touched a new high, moving to its highest level since June 2001 on Friday with consolidation talk lifting mining stocks but with Daily Mail & General Trust slumping as plans to sell a regional newspaper chain were dashed.

The FTSE 100 added 0.3% at 5,846, and European indexes also held around highs. See Europe Markets.

Mining stocks made up three of the top four gainers in the U.K.'s main index after Lonmin (LMI) said it has had preliminary discussions with an undisclosed company that may lead to a takeover bid.

Frederic Boissel, a trader with Global Equities in Paris, said Lonmin's rocketing price has pulled other miners higher because it suggests the whole sector may be revalued.

Preventing miners making it a clean-sweep of the index's top spots was mortgage bank Northern Rock (NRK), which jumped nearly 5% after HSBC issued a bullish note and as mergers-and-acquisitions rumors continued to sweep the sector.

Meanwhile, Daily Mail & General Trust (DMGT) was far and away the main index's biggest faller, giving up over 12% after the company decided to hold on to its Northcliffe Newspapers division, put on the block last November.

The company said that it received three offers for Northcliffe, as well as offers to buy part of the business, but that they didn't think the offers fully reflected the value of the business, following a slowdown in regional newspaper activity.

Analysts at Numis Securities said they expect the markets to switch their focus to trading fundamentals within the newspaper industry, rather than consolidation activity.

Other newspaper groups slumped on the news, with Trinity Mirror (TNI) losing 2.9% and Johnston Press (JPR) giving up 6.4%.

Also in retreat, software company Sage Group (SGE) dipped 1.1% after U.S. peer Intuit
INTU, -0.59%
announced a profit forecast below analyst expectations.

Elsewhere the London Stock Exchange (LSE), which is trying to fend off a hostile bid from Australia's Macquarie Bank, surged 8.2% after saying it will double the amount of cash it returns to shareholders if it remains independent.

The LSE said its cash-return program will hit 510 million pounds ($887 million), or 200 pence a share. See full story.

In other M&A news, National Grid
NGG, +1.21%
(NG) slipped 1.6% after a New York Times report that the company may enter a bidding war for KeySpan
519421, -0.33%
the largest electricity generator in New York state. KeySpan confirmed it's up for sale. See full story.

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